As part of the Smaller Government – additional reductions in the number of Australian Government bodies initiative announced as part of the 2014-15 Budget, the Private Health Insurance Administration Council (PHIAC) will cease as a separate body and its prudential supervisory functions will be transferred to the Australian Prudential Regulation Authority (APRA).
The transfer of PHIAC’s prudential supervisory functions will be given effect by the Exposure Draft Private Health Insurance (Prudential Supervision) Bill 2015 (Exposure Draft Bill) which will represent a new Act for the regulation of private health insurers, administered by APRA.
The Exposure Draft Bill replicates elements of the regime currently set out in the Private Health Insurance Act 2007 (PHI Act) with some modifications to harmonise certain provisions with other legislation administered by APRA, reduce duplication, update investigation powers to bring them more into line with the Regulatory Powers (Standard Provisions) Act 2014 and allow the regime to operate more efficiently.
The main elements of the Exposure Draft Bill are:
- the registration of private health insurers and the obligations of registered insurers;
- the regulation of health benefits funds, including in relation to restructure, merger, acquisition and termination of health benefits funds; and
- APRA’s supervision of private health insurers, including establishing prudential standards and directions and APRA’s enforcement powers.
It is also proposed that corresponding amendments will be made to the PHI Act repealing provisions relating to the establishment, functions and responsibilities of PHIAC. These changes are summarised in the attached consultation paper.